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In this research documentary, I will examine the annual financial performance from the years 2018 and back of one of the biggest corporations in the world which is the CocaCola Company. The research will consider the various ratios used in analyzing a financial situation of a business like liquidity ratios, activity ratios, debt ratios, and profitability ratios, and then apply them to determine whether CocaCola Company is performing well or not. The sources of data collections method were used from Yahoo Finance, Investing.com, Financial Modeling Prep, and the instruction of Mr. An Hai Vo, my Finance Corporate subjects lecturer to better know and understand the companys financial health history, give out my own recommendation and conclusion about CocaCola financial potential specializing 2018 2020 period.
lOMoARcPSD|12332183 COCA-COLA FINANCIAL ANALYSIS - INDIVIDUAL ASSIGNMENT Corporate Finance (FPT University) StuDocu is not sponsored or endorsed by any college or university Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 LECTURER: AN HAI VO FINANCIAL ANALYSIS FIN202 // PREPARED BY AN DOAN Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) Inc lOMoARcPSD|12332183 ABSTRACT AND SUMMARY Supervised by: Mr An Hai Vo, Master of Science In this research documentary, I will examine the annual financial performance from the years 2018 and back of one of the biggest corporations in the world which is the Coca-Cola Company The research will consider the various ratios used in analyzing a financial situation of a business like liquidity ratios, activity ratios, debt ratios, and profitability ratios, and then apply them to determine whether Coca-Cola Company is performing well or not The sources of data collections method were used from Yahoo Finance, Investing.com, Financial Modeling Prep, and the instruction of Mr An Hai Vo, my Finance Corporate subject's lecturer to better know and understand the company's financial health history, give out my own recommendation and conclusion about CocaCola financial potential specializing 2018 - 2020 period All information in this article is unique, with references attached below As a sophomore in economics, the analysis below certainly has a lot of flaws Looking forward to your comments INDIVIDUAL ASSIGNMENT Financial Statement Analysis of Coca-Cola Company ( 2018 - 2020 ) Gia An Doan Nguyen Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 FINANCIAL ANALYSIS OF TABLE OF CONTENTS COCA-COLA CO I BUSINESS OVERVIEW Company Profile Mission and Vision About Competitors Operation Segment II FINANCIAL STATEMENT Income Statement 12 Balance Sheet 14 Cash Flow Statement 99 III FINANCIAL RATIO Liquidity Ratio 18 Efficiency Ratio 19 Leverage Ratio Profitability Ratio Market Value Ratio 22 24 25 25 IV PEER-GROUP ANALYSIS Asset Management 25 Fund Management 27 Profitability 30 V CONCLUSION Recommendation Conclusion PERIOD: FROM 2018 TO 2020 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) 12 14 lOMoARcPSD|12332183 FINANCIAL ANALYSIS | PAGE | 01 2018 - 2020 COCA-COLA CORPORATION COMPANY OVERVIEW PROFILE Founded and headquartered in Atlanta, Georgia, the Coca-Cola Group currently operates with its branded products in 200 countries around the world The Coca-Cola brand is the top-selling beverage brand that owns, licenses, and markets more than 500 diversified brands (Bottled Water, Soft Drinks, and Juices) Coca-Cola Co owns four of the top global nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta, and Sprite MISSION AND VISION The company's mission and vision are reflected by social activities in the countries and markets where Coca-Cola is present There are three main values including becoming a favorite brand, topchosen brand; sustainable development is a beverage brand that aims to find innovative and sustainable solutions; and for a better future life, Coca-Cola will continue to invest to improve the lives of everyone - from corporate system to communities Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 GLOBAL GEOMETRY YEAR 2018 FINANCIAL ANALYSIS | PAGE | 02 37M COMPETITORS Nowadays, the non-alcoholic beverage segment of the commercial beverage industry is highly competitive, consisting of a variety of brands in Coca-Colas' target markets PepsiCo, Inc., one of the main competitors worth noting Including other significant: RedBull, DPSG, Keurig Dr Pepper, Mondelēz International, Inc., Kraft Foods Group, Inc., Soylent, and Tetra Park, etc Coca-Cola also competes with many regional and local companies Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 FINANCIAL ANALYSIS | PAGE | 03 OPERATING SEGMENT As the basic foundation for internal financial reporting, the operating structure effective from Dec 31, 2015, includes the following: Eurasia and Africa The Asia Pacific Europe Bottling Investments Latin America Corporate North America Bottling Investments 19% Eurasia and Africa 6% Europe 16.8% The Asia Pacific 12.8% Latin America 10.6% North America 34.7% Revenue Distribution of the Coca Cola Company in 2020 by operating segment Souce Statista com - : In 2020, one-third of The Coca-Cola Company’s total revenue (35%) was specifically generated in North America, becoming their most lucrative by far General description finance in this report presented in North America - financial indexes listed on NYSE (New York Stock Exchange) IND IVIDUAL ASSIGNMENT Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) AN DOAN lOMoARcPSD|12332183 FINANCIAL STATEMENT ANALYSIS Date: 20 Oct 2021 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) PAGE lOMoARcPSD|12332183 INCOME STATEMENT 2018 - 2020 ( From Investing.com) FINANCIAL ANALYSIS Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) PAGE 05 lOMoARcPSD|12332183 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 FINANCIAL RATIO ANALYSIS Date: 20 Oct 2021 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) PAGE 22 lOMoARcPSD|12332183 Table 4.1: Financial Ratios Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 FINANCIAL RATIOS LIQUIDITY RATIO As the proportion in Tab 4.1 shows that the current ratio fluctuated from 2018 to 2020, reaching the highest point in 2020 at 1.32 Causing by including an increase in the current assets (from Tab 1.1) meanwhile there was a quick fall of short-term debt in 2020 Nevertheless, exact concluding the company's ability to pay short-term obligations is usually based on a quick ratio After relatively acceptable falling from 0.66 to 0.56, from 2019-2020 rebounded an upward trend (+0.4) at 0.96 in 2020 In addition, the company's liquidity is generally higher than that of the beverage industry as a whole and maintained until now, proportions of the quick ratio between Coca-Cola's and the beverage industry are 1.25 and 1.24 respectively In short, the firm's liquidity has nothing went wrong at this time LEVERAGE RATIO The trend of debt-to-equity has been decreasing from 2018 to 2020, with ratios is on a downward trend from 3.78 to 3.42 Even though the range of this ratio is well under 4, still too high because Coca-Cola relies more on loans to raise funds than shareholders' equity, hitting a higher point than its industry which is 2.8 on average The company is in the poor condition with large debts and high risks, but this slow decreasing ratio referred Coca-Cola can more to gradually reduce the risk of paying liabilities FINANCIAL ANALYSIS | PAGE 24 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 FINANCIAL ANALYSIS PAGE | 25 EFFICIENCY RATIO Receivable Turnover Ratio In overview, receivable turnover demonstrated that after maintaining the same figure from 2018 - 2019 at 9.38, it climbed remarkably to 10.5 in 2020, reaching an average value of 9.6 This is the result of limited trade credit terms to customers In comparison industry index 9.49, forecast with a higher rate is less potential to towards adopting credits, and face to competitive credit terms from others in their industrial peer groups Inventory Turnover Ratio The number of times Coca-Cola sells inventory yearly varies just under 4,4 in years It increased from 4.26 to 4.33 between 2018 and 2019 before dropping to 4.11 in 2020, which means that inventory sales are decreasing and there is a bit of ineffectiveness in inventory control Based on consideration between the average value is 4.23, which is much lower than the industry average ( equal 6.33), indicating to Coca-Cola’s inventory liquidity was problematic and its blocked liquid ability of inventory Total Asset Turnover Ratio Besides, total asset turnovers fluctuate slightly, reaching values at 0.43, and 0.38 in 2018 and 2020 respectively, an average value equal to 0.396, radically reaches lower range than the industry average of 0.63 This turnover rate is not equal to 1, which is understandable because the beverage goods industry usually has this index lower than general fields But the fact that Coca-Cola's rate is lower than the industry means the problem of using assets acquired and inefficient generating sales revenue, also probably caused by some other external problems Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 PROFITABILITY RATIO Based on indicators, all are oscillating in a certain direction, with a strong upward trend followed by a slight decrease from 2018-2020 Firstly, terms of net profit margin increased from 20.20% to 23.94% and decreased to 23.47% last year, the average index was 22.23%, much higher than the industry (14.5%) There is no doubt about the efficiency of converting profit from revenue of Coca-Cola The higher the net profit margin, the higher the profitability of the company Next, the percentage of ROA increased from 7.73% to 10.33% in 2019 and then slightly fall to 8.87% in 2020 ROE is not out of this trend, in 2018-2019 hit a peak at 46.99%, this amazing number fall slightly to 40.14% in 2020 Compared with the average value of the whole industry, the three-year average ROE of 41.67% is higher than in general (38.65%) Besides, the average ROA of Coca-Cola remains lower but relatively the same as the industry's ratio, at 8.97 and 9.08 respectively as being proved the efficiency of using corporate assets and shareholders' investment to create profit at a higher management level MARKET VALUE RATIO With the EPS index, although book value grows steadily year by year, the market value fluctuates, EPS increased sharply from $1.5 in 2018 to peak at $2.07 (+38%) in 2019, and decrease to 1.79 (-13.5%) in 2020 thereafter Coke's average EPS of 1.78 is less than half of the industry's EPS of $2.84, the company faces the risk of competition from other businesses in the same industry due to its poor attractiveness to investors in stock market, risk management policies is important to promote EPS growth in the coming time FINANCIAL ANALYSIS Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) PAGE 26 lOMoARcPSD|12332183 PEER GROUP AND COMPETITOR ANALYSIS Date: 20 Oct 2021 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) PAGE 27 lOMoARcPSD|12332183 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 FINANCIAL ANALYSIS PAGE 28 LIQUIDITY AND ASSET MANAGEMENT Comparatively, Coca-Cola's current ratio of 1.48 is much higher than PepsiCo's 0.95 and also better than the industry average, as implies that Coca-Cola has better advantages in their ability to meet their short-term financial obligations There is a remarkable difference in the debt collection periods ratio for both Coca-Cola and PepsiCo, where the number of a receivable turnover range is 9.24 and 8.14 respectively, in a norm average ratio is 9.46 for their industry, which is considered that PepsiCo has stronger bargaining-power than Coca-Cola Notably, with compared the inventory turnover in the general industry ratio of 8.31, the day's sales of inventory of PepsiCo enjoys a shorter period than Coca-Cola's ratio(4.23), which could be attributed to the more diversified nature of PepsiCo's product lines include foods than only deals in the beverage of its rival Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 FUND MANAGEMENT Coke vs Pepsi: the 2020s Cola Wars PEP’s Debt-to-Equity ratio stood at 259.94% while KO’s ratio was lower at 188.8% Here is what's going on, Coca-Cola has been far more successful at deleveraging over recent years as its Debt-toEquity ratio has narrowed the gap from 197.05% on industry average Concisely, with PEP's slightly lower cash position, it has inadequate liquidity to manage its operation and arranged debts PAGE 29 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 COKE PEPSI BEVERAGE INDUSTRY 0% 5% 10% 15% 20% 25% NET PROFIT MARGIN PROFITABILITY Apparently, in terms of net profit margin, Coca-Cola is ahead of PepsiCo (10.94%) at 22.23% and above 14.51% of the industry In comparison with ROE and basic EPS, PepsiCo has a stronger performance more than Coca-Cola along with its Frito-Lay acquisitions and expanded product operations Despite coming from a higher return position but PepsiCo's P/E ratio has a marginally lower figure compared to Coca-Cola This is understandable by explaining the PepsiCo's market capitalization still stands at a low compared to Coca-Cola's market cap of about $250 billion The market needs more efforts to reduce risk in PEP’s ability to convert its revenues to profits, to compete with KO’s track record This competition keeps both corporations stay innovative and aggressive tune to please market share in the entire effect of coronavirus FINANCIAL ANALYSIS P A G E Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 FINANCIAL ANALYSIS CONCLUSION AND RECOMMENDATION P A G E Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 RECOMMENDATIONS Primary objectives should promote Coca-Cola's historical strengths, implementing the digitalization supply chain and distribution management policies that enabled the firm to break its stable fluctuation in order to achieve more sustainable growth and competitiveness In particular, the tendency of using a bigger long-term debt can threaten healthy profit meanwhile the refranchising bottling plants has ejected but we see nothing change in the return ratio of CocaIn the context of the F&B Cola The company needs effective industry being affected due to asset utilization, overall asset the COVID-19 pandemic, the management policies and dividend outlook for Coca-Cola remains payout policies need immediate faced to risky business management action to change performance, the innovation in international financial business management consists management structure and of some of the recommended strategy, the overall organization to solutions below: initiate a long-term development P A G E Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 | FINANCIAL ANALYSIS PAGE | 33 CONCLUSION Basically, standing in front of macroeconomic challenges in their markets, the general financial position of Coca-Cola from 2018 to 2020 is not too impressive The notable decline in return in view of the wide operation countries even in over restructuring 200 plan including cutting 2.200 employment, refranchising its bottling plants (earning fees from franchise owners recorded revenues per bottling plant) Totally, The fundamental financial management in Coca-Cola policies is Debts-method-investments historically is among components of its which the business key base Evaluation of the ongoing recovery of COVID-19 is beyond the expectation of the experiment The engagement of e-commerce accelerated and is expected to remain a priority, as Challenge is CHANCE making marketing efficiency - highlighted by the topline growth in markets where abating Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) the pandemic is lOMoARcPSD|12332183 Financial Statment Analysis INDIVIDUAL ASSIGNMENT - FIN 202 The financial statement analysis is based on the information sources cited below In addition, this essay could not have been completed without the help of my lecturer, the knowledge of FIN202 (Corporate Finance) and the diverse sources of information that helped me a lot REFERENCES REFERENCE #1 REFERENCE #2 Coca-Cola Annual Report Coke Consolidated Website (2020) Coca-Cola Viet Nam Mission and Vision The ColaCola Company Website (2021) Retrieved from: https://investor.cokeconsolidated.com/financialinformation/annual-reports Retrieved from: https://www.cocacolavietnam.com/cocacola-vietnam REFERENCE #3 REFERENCE #4 Trefis Team (2020) Forbes Coca-Cola’s Sales Down 16% But Stock Up 16%; Why? Coca-Cola Working Capital Macroexis Retrieved from: https://www.forbes.com/sites/greatspeculations/2020/05/19 /coca-colas-sales-down-16-but-stock-up-16-why/? sh=61c116946b1c Retrieved from: https://www.macroaxis.com/invest/ratio/KO/Working-Capital Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn) lOMoARcPSD|12332183 Downloaded by Pham Huu Khiem (khiemphhs153163@fpt.edu.vn)